TechStar Interview: David Blumberg

When you first meet David Blumberg his smile is what you notice. But shortly thereafter, you notice how smart he is; later, you begin to see this man's true level of intelligence.

I don't just say Blumberg is a smart man because he counts Harvard, Stanford B-School and INSEAD as the schools he's attended; no, that's not it all.

It's more like a certain 'street smarts' of investing that Blumberg recurrently exhibits during our conversations. It's when he talks about the art of investing in start-ups that David Blumberg's eyes twinkle and his real brainpower surfaces.

And though he's been investing for more than 24 years now at top firms like Apax and T. Rowe Price and then his own firm, his youthful zeal belies that metric.

Founded in 1991, Blumberg Capital has 35 portfolio companies and $37 million invested in Fund I. Fund II has $91 million invested and was established in 2007. Blumberg tells me he has sold nine of the 14 companies from Fund 1 and has five left.

Blumberg Capital seems omnipresent at tech, telecoms and biotech conferences, whether it's David in attendance or a member of his team doing the reconnoitering. It's "early-stage targets" that Blumberg covets and lasso them into his portfolio he does. He craves to invest in Social, Digital and Mobile media with a special focus on anything with an SaaS or advertising model attached to it.

Blumberg is Jewish, speaks Hebrew and likes to invest in Israeli companies. "Between one-quarter and one-third of Blumberg Capital's investments are in Israeli companies," he said, "companies from Israel come from an environment that has a strong rule of law, isn't corrupt and the environment there is most similar to the US."

He continued on a verbal roll, "I see the world in hubs and spokes; generally the US is a very good bet. New York and San Francisco became the hubs with New York having a great cluster of publishers, media and digital media and of course San Francisco having supremacy around software, social media and other great emerging technologies. Other hubs in my mind include Berlin, Barcelona and Bangalore."

Blumberg adds, "Culture derives from structure--Korea divides right down the middle: both eat Kimchi and speak the same language."

Who are some of Blumberg's 'high-flyers' right now? "Nutanix is one of my favorites right now," Blumberg beams, "it's a virtualization storage company founded by three brilliant guys out of the Indian Institutes of Technology (IIT) and staffed by a team of ex-Google and Oracle executives." Others include Doubleverify, an Israeli-founded company which allows advertisers to get their maximum ROI on ad dollars and Hootsuite, which offers a "social media dashboard" to measure campaign results.

"The market for Nutanix," Blumberg projected, "is the best of the three. Virtualization storage is currently virtual servers dominated by VMware--there's this spaghetti mess of storage issues. Nutanix uses solid-state storage devices which are much better; two orders of magnitude, a dramatic improvement."

I found one Blumberg Capital company that he didn't mention to me: Sonar. This was a mind-blowing company.

Sonar aggregates all your social media apps into one central app which senses which of your Facebook, Twitter, LinkedIn and Foursquare friends and intriguingly, their friends are in the room--whether the room is a small dining room or the Jacob Javits Center--then tells you how you're connected, where they are in the room and gives you their quick-bio. As if this isn't enough, Sonar then sends what it refers to as a "hyper-targeted introduction" to those you want to get to in the room; all on your smartphone. Talk about 'bringing people together?' This is off-the-hook.

What attracts Blumberg's money? "We go after great people addressing big problems with innovative solutions," he said.

But what really strikes me as special about David Blumberg is his personal story which I recently got him to share with me. Something about how different this man's background is from anything I've ever heard cheered me up immensely.

"I was the little Jewish kid in Fresno, California; and Fresno has no Jews," Blumberg started out at the beginning. "I grew up a real Liberal but always had a deep appreciation for the 'flyover states.'"

"I always went to public schools. Then, I went to Harvard, where I studied economics had it drummed into me how Republicans were 'mean and nasty, hated poor people' and were 'rich and greedy.' Then the importance of abortion; poor, starving people; and gay rights was the main agenda. I knew something wasn't right about this indoctrination."

There's nothing so earth-shattering about a well-educated Jewish investor from Fresno who switched political affiliations after college, is there?

Not unless he's admittedly gay.

"I live in San Francisco and I'm gay," Blumberg set-up his analogy, "but I don't like the effete, elite, intellectual crowd as most gay San Franciscans do. I'm a Conservative Republican, have a strong faith in God, believe in the people who made and make this country great and I'm gay too."

"I also started the first 'gay-owned' VC firm," Blumberg adds.

Blumberg continues talking with true happiness about his "wonderful French partner and two young sons" as if his life has turned out just as he had hoped--he's a convicted optimist with a real zest for life. Just listening to David Blumberg made me feel good.

And then a final thought occurred to me: I just haven't seen much of that kind of happiness in the VC world.